Health benefits return to DHB control

The New Zealand government has set up a new company to manage the implementation of the shared services program designed by Health Benefits Limited (HBL), which will cease to exist from June 30.

HBL was set up in 2010 to work with the district health boards to find savings of $700 million over six years through better procurement processes and streamlined practices.

However, the agency was controversial throughout its tenure and only one of its four business cases – the national infrastructure platform (NIP) – said to be on track. HBL signed an agreement with IBM in February to use the Infrastructure as a Service (IaaS) platform and most of the DHBs are on board.

Of the three other business cases, the finance, procurement and supply chain (FPSC) program was put on hold for a nine-month replanning exercise. The national solution, which involves an upgrade to the Oracle 12.2 eBusiness suite, was originally budgeted at $88 million but is expected to cost far more as DHB implementation costs were not included.

A governance review of the FPSC program has been undertaken, led by chairman of the National Health IT Board, Murray Milner, and a new FPSC Design Authority (DA), principally comprised of DHB CEOs and CFOs, was re-launched in November 2014.

There have also been delays to the other two business cases, food services and linen and laundry services, with the food services agreement in particular a bone of contention for many DHBs.

HBL was roundly criticised in a letter from the chair of the DHB national CFOs committee, Justine White, to the chair of the DHB chief executives, Kevin Snee, in March last year. The letter (pdf) was leaked by a whistleblower, who described HBL's claimed savings as “smoke and mirrors”.

Health Minister Jonathan Coleman announced last November that HBL would be axed and a DHB-owned vehicle set up in its place. This week, he announced that Cabinet had agreed to the establishment of NZ Health Partnerships Limited, which will be equally owned by all DHBs and lead the implementation of the shared services business cases.

“HBL led this work through the development phase, and now that we are in the implementation phase, the responsibility best sits with DHBs,” Dr Coleman said in a statement.

“The HBL Transition Interim Governance Group has worked through the next steps, including a due diligence process, and all DHBs have approved the final proposal.”

Dr Coleman claimed that HBL and the DHBs had made over $300 million in savings since 2010.